What is data residency?
Your vendor's EU option may cover the main database but not the backups, the logs or the AI calls.
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Data residency — Data residency is the requirement that certain data be stored and processed within a specific country or region, driven by law, contract or policy. It is met by choosing where the customer's database physically runs.
Why it matters
Data residency rules say some data has to be stored and handled inside one country or region. Being reachable from there isn't enough. The rule can come from a law that covers that kind of data. It can come from a contract, where a customer named the place. Or it can be a policy your company holds itself to. Meeting it is mostly a hosting choice: pick a region for the database, then check that nothing in the data's path leaves that boundary.
Scope is what catches people out. When a vendor offers an "EU option" or a regional setup, it's usually talking about where the main database lives. That leaves open questions about backups, where logs are kept, and any AI step that might send data to a model host somewhere else. Each of those is its own data flow. Each can quietly cross a line you thought was closed, while the main database stays right where it should. So to confirm residency, you ask about each path one by one, beyond the database's home region.
How data residency is met
- 1
Identify the residency rule
Find the law, contract or policy that sets the boundary.
- 2
Choose the region for the main database
The customer's data is set up in a database in that region.
- 3
Check backup locations
Make sure backups are kept inside the same boundary, not a default global spot.
- 4
Check log and AI paths
Make sure logs and any outside handling, AI calls included, stay in scope.
- 5
Document the boundary
Write down which systems and paths are covered, so you can show it in a review.
The mistake to watch for
Questions
- How is data residency different from data sovereignty?
- Data residency is about the physical place where data is stored and handled. Data sovereignty goes further. It asks which country's laws govern that data wherever it sits, and that can matter even when residency rules are met.
- Does choosing a regional database satisfy data residency on its own?
- Not necessarily. Backups, logs and any step that sends data elsewhere, such as a call to an AI provider, are separate paths. Each needs checking against the same boundary.
- Who typically requires data residency?
- Three sources set it. A national or regional law may cover certain kinds of data. A customer contract may name a place. Or your company may set its own policy. Each one can draw a different boundary.